Boerse Stuttgart GmbH Postfach 10 06 43 70005 Stuttgart European Securities and Markets Authority (ESMA) 103 rue de Grenelle 75007 Paris, France Boerse Stuttgart GmbH Dr. Christoph Boschan v. d. Bussche Tel +49 711 222 985-510 Fax +49 711 222 985-545 christoph.boschan@boerse-stuttgart.de Stuttgart, 30 th October, 2015 Boerse Stuttgart s response to the ESMA Consultation Paper on Draft implementing technical standards under MiFID II Dear Sir or Madam, Boerse Stuttgart would like to thank you for this opportunity to answer the questions raised in ESMA s Consultation Paper on Draft implementing technical standards under MiFID II (reference 2015/1301). Boerse Stuttgart is one of Europe's leading stock exchange organizations for private investors. It is organized as a regulated market, ensuring safety and effectiveness in trading. With the European Warrant Exchange, known by its abbreviated name of Euwax, it is also Europe's most attractive trading place for leverage and investment products. Boerse Stuttgart owes its premier position to the ongoing enhancement of its product portfolio and its customer-friendly, one-stop approach. Alongside leverage and investment products, investors can trade equities, bonds, investment fund units, and participation certificates. Trading is safe, fast, simple, and extremely efficient. Today, Boerse Stuttgart is Germany's leading player in the field of intermediarybased stock exchange trading. Especially as regards corporate bonds and investment fund units, Boerse Stuttgart leads the German market. Yours sincerely, Boerse Stuttgart GmbH Dr. Christoph Boschan v. d. Bussche Member of the Management Board Dr. Martin Wagener Head of Regulatory Affairs Annex Boerse Stuttgart GmbH Postfach 10 06 43 Tel +49 711 222985 0 Vorsitzender des Aufsichtsrates: Dr. Michael Völter Börsenstraße 4 70005 Stuttgart Fax +49 711 222985 555 Geschäftsführer: Ralph Danielski, Dr. Christoph Boschan 70174 Stuttgart USt-IdNr. DE 19 11 91 166 www.boerse-stuttgart.de Sitz: Stuttgart, Amtsgericht Stuttgart, HRB 753383 Deutsche Bank AG Kto: 141713800 BLZ: 600 700 70 BIC: DEUTDESSXXX, IBAN: DE60 6007 0070 0141 7138 00
Reply form for the Consultation Paper on Draft Implementing Technical Standards under MiFID II 31 August 2015
Date: 31 August 2015 Responding to this paper The European Securities and Markets Authority (ESMA) invites responses to the specific questions listed in the ESMA Consultation Paper on Draft Implementing Technical Standards under MiFID II, published on the ESMA website. Instructions Please note that, in order to facilitate the analysis of the large number of responses expected, you are requested to use this file to send your response to ESMA so as to allow us to process it properly. Therefore, ESMA will only be able to consider responses which follow the instructions described below: use this form and send your responses in Word format (pdf documents will not be considered except for annexes); do not remove the tags of type <ESMA_ QUESTION_MIFID_ITS_1> - i.e. the response to one question has to be framed by the 2 tags corresponding to the question; and if you do not have a response to a question, do not delete it and leave the text TYPE YOUR TEXT HERE between the tags. Responses are most helpful: if they respond to the question stated; contain a clear rationale, including on any related costs and benefits; and describe any alternatives that ESMA should consider. Naming protocol In order to facilitate the handling of stakeholders responses please save your document using the following format: ESMA_MiFID_ITS_NAMEOFCOMPANY_NAMEOFDOCUMENT. e.g. if the respondent were ESMA, the name of the reply form would be: ESMA_MiFID_ITS_ESMA_REPLYFORM or ESMA_MiFID_ITS_ESMA_ANNEX1 To help you navigate this document more easily, bookmarks are available in Navigation Pane for Word 2010 and in Document Map for Word 2007. Deadline Responses must reach us by 31 October 2015. All contributions should be submitted online at www.esma.europa.eu under the heading Your input/consultations.
Publication of responses All contributions received will be published following the end of the consultation period, unless otherwise requested. Please clearly indicate by ticking the appropriate checkbox in the website submission form if you do not wish your contribution to be publicly disclosed. A standard confidentiality statement in an email message will not be treated as a request for non-disclosure. Note also that a confidential response may be requested from us in accordance with ESMA s rules on access to documents. We may consult you if we receive such a request. Any decision we make is reviewable by ESMA s Board of Appeal and the European Ombudsman. Data protection Information on data protection can be found at www.esma.europa.eu under the headings Legal notice and Data protection. 3
General information about respondent Name of the company / organisation Boerse Stuttgart GmbH Activity Regulated markets/exchanges/trading Systems Are you representing an association? Country/Region Germany Introduction Please make your introductory comments below, if any: < ESMA_COMMENT_MIFID_ITS_1> Börse Stuttgart attends to the consultation of ITS 3 with a specific focus on securitised derivatives which have commodities as an underlying. Due to their classification as derivatives under Art. 2 (1)(29) MiFIR the regulator causes securitised derivatives to fall under the obligations of Article 57-58 MiFID II in the context of which ITS 3 specifies reporting standards. Securitised derivatives with commodity underlyings have different characteristics compared to traditional derivatives (e.g. futures, options). In particular securitised derivatives are not subject to regular margin calls and usually follow the same sort of settlement rules as other transferable securities that trade on cash markets. Therefore, they have no significant overall risk profile. Since MiFID II/MiFIR particularly aims to prevent market abuse and systematic risk regarding commodity derivatives, we believe ESMA s mandate does not provide any indication that the regulator s intent was to extent the position limit arrangements beyond traditional derivatives. Based on the ITS presented in this consultation paper, Börse Stuttgart notes that neither the templates of the reporting tables nor the purpose of the provisions support the approach that securitised derivatives and retail investors are meant to be in the scope of the legislators intention, but the opposite. Furthermore, questions of data privacy evolve in case daily and weekly reports contain information, i.e. position, on natural persons. From an implementation point of view, Börse Stuttgart sees substantial risk to be faced with discrepancies to national and European data protection and privacy regulations. In any case, the proposed requirements in connection with commodity derivatives, position limit regulations and reporting obligations, would mean extensive implementation and running costs for market operators, market participants, and issuers in the securitised derivatives business. Börse Stuttgart (and other affected stakeholders) expects that the increased costs, will eventually lead to an abolition of securitised derivatives on commodities which can be considered as a de facto ban of this product type. Börse Stuttgart notes that this is in contradiction to ESMA s standpoint in RTS 21(17) which states that Position limits should not create barriers to the development of new commodity derivatives and should not prevent less liquid sections of the commodity derivatives market from working adequately. As already stated Börse Stuttgart considers the application of Art 57-58 on securitised derivatives as a de facto prohibition of this product type. Hence there is a lack of an explicit enabling provision which is obligatory for this kind of massive interference in the European fundamental freedoms and national constitutional rights. < ESMA_COMMENT_MIFID_ITS_1> 4
Q1. Do you agree with the draft ITS on the timing and format of communications and publications? <ESMA_QUESTION_MIFID_ITS_1> <ESMA_QUESTION_MIFID_ITS_1> Q2. Do you agree with the draft implementing technical standards for data reporting services providers? Please provide reasons. <ESMA_QUESTION_MIFID_ITS_2> <ESMA_QUESTION_MIFID_ITS_2> Q3. Do you agree with the proposed time and day for submission? If not, please explain why and provide an alternative time and/or day. <ESMA_QUESTION_MIFID_ITS_3> <ESMA_QUESTION_MIFID_ITS_3> Q4. Do you have any comments on the format or fields for the weekly position report? <ESMA_QUESTION_MIFID_ITS_4> Börse Stuttgart attends to the consultation of ITS 3 with a specific focus on securitised derivatives which have commodities as an underlying. Due to their classification as derivatives under Art. 2 (1)(29) MiFIR the regulator causes securitised derivatives to fall under the obligations of Article 57-58 MiFID II in the context of which ITS 3 specifies reporting standards. Securitised derivatives with commodity underlyings have different characteristics compared to traditional derivatives (e.g. futures, options). In particular securitised derivatives are not subject to regular margin calls and usually follow the same sort of settlement rules as other transferable securities that trade on cash markets. Therefore, they have no significant overall risk profile. Since MiFID II/MiFIR particularly aims to prevent market abuse and systematic risk regarding commodity derivatives, we believe ESMA s mandate does not provide any indication that the regulator s intent was to extent the position limit arrangements beyond traditional derivatives. Besides this (please refer to the introduction for further general comments), Börse Stuttgart notes that neither the templates of the reporting tables nor the purpose of the provisions support the approach that securitised derivatives and retail investors are meant to be in the scope of the legislators intention, but the opposite. Furthermore, questions of data privacy evolve in case daily and weekly reports contain information, i.e. position, on natural persons. From an implementation point of view, Börse Stuttgart sees substantial risk to be faced with discrepancies to national and European data protection and privacy regulations. <ESMA_QUESTION_MIFID_ITS_4> Q5. Do you have any comments on the validation and error management checks proposed? <ESMA_QUESTION_MIFID_ITS_5> 5
<ESMA_QUESTION_MIFID_ITS_5> Q6. Do you agree with ESMA s proposals? Please specify those proposals with which you do not agree, with the reasons why, and provide an alternative proposal. <ESMA_QUESTION_MIFID_ITS_6> <ESMA_QUESTION_MIFID_ITS_6> 6